Monell v. Lawrence , 12 Johns. 521 ( 1815 )

Yates, J.

The-, decree in. .this; b&Use, of the-, fith 'of Bíqr.cñ,. Í313,"being -by .-consent,. Under an agreement-'between'thb parties,. it is insisted that it cannot be modified, or set aside,, upbti-molion, ifer mU-tter-arising. afterwards. z. "-.

This-is a correct principle as tb- matters' arising .subsequently, and so connected with-: the subject of the decree as to change the intent of it, but can never be urged to avoid a benefit resulting to a party by a ■' subsequent act-not inconsistent, with,'. but in'furtherance of, that part of the decree in which the"respondent has "an.-, .interest, and to- which, fif the allegation- 'is substantiated) he must have assented* " ’’ " 1 ;

. The object of the respondent’s bill,- in the court below, was to effect a sale of the mortgaged premises by the master, to reeqvier, out of the proceeds, the sum due to him-; arid although the Subsequent purchase of the equity of redemption, by thd appellant^ ¡could not destroy the respondent’s priority for the payment of the amount due on his mortgage, according' to the decree by consent, (which certainly could not be altered in that respect,) yet the rights of the appellant and the other defendants, in the court below, being reserved to them respectively, the question as to priority remained open, and was a subject for future investigation by the court; and, until that was settled, the appellant had a right to better , his case, by purchasing the equity of redemption.

The decision of this cause, however, wholly depends upon the nature of the payment made to Mr. Jay, the solicitor of the respondent. If, then, bn an examination of the evidence, it should turn out to have been in extinguishment of the mortgage, the subsequent proceedings must be nugatory, as founded on an instrument which had ceased to operate, and the order of the court ofchancery ought to be reversed ; but if it should be a mere deposite, the order ought to be affirmed.

From the correspondence between Mr. Burr and Mr. Jay, no correct conclusion, as to the nature of the payment, can be drawn. The former states that Monell was disposed to redeem, and had offered to pay the principal, interest,, and costs, but. that Mr. Lawrence refused to receive it; this the latter denies, and says that he only refused, in behalf of Mr. Lawrence, to give an assignment of the mortgage, and was still ready tp receive the amount, and stop all further proceedings, but-without assigning the mortgage, which, he said, could only be requiréd for the purpose of defeating a trust for the benefit of Mr. Sackettfs creditors, a purpose which appeared to him iniquitous ; that, therefore, he saw no reason for delaying a sale of the premises; and the receipt, subsequently given'by him in the same cause for the amount, does not purport to be in extinguishment of the mortgage, although that would be the inference, in the absence of other testimony on the subject; but it appears, from the evidence of Mr. Jay, confirmed by- the testimony of Jasper LyncK, that this money was received at the instanbe of Monell, merely to save interest, and not with a view to redeem the mortgage. That this must have been the cáse, tjie subsequent conduct of the parties sufficiently evince. It certainly could not have been the understanding that all further proceedings should be arrested by it,¡ as the time of sale was subsequently prolonged, at the request of. the appellant arid his solicitor.-'' The.amount paid; too, is 'confined .-.to':-£he''principal;- and interest, without costs,. a..circumstance manifestly indicative of: the character of-the transaction. ■ •, - - ; , .

. 1 do,not think'that the situation, of Jasper Z,y-ne/iaffords suffW ciebt grounds to affect his credibility as a,witness, or invalidate his acts, as a master... . He was .perfectly disinterested,, and expressly declares that he had no:; connexion, with the business of Mr. Jay in 'the -court' of ‘chancery. . His being a partner" in other business .(not in that, court) .could not disqualify him to perform duties, in.,his official .capacity*because Mr.''Say wps •the solicitor; nor can t-he sale made b(y liim be set aside, merely because the order of the 29th- of Juna 'had been made/ unless positive notice of the existence.of such-prder.be brought; home; to him. ' This-has'not'been-done. .The sale, consequently, i§ hot irregular- on that account; anc] the purchasers- ought to be protected,' unless it can be avoided for some .other cause. They paid their ino'ney 'under a belief, and in' full confidence:, that the -title to the property passed to them at the time "the conveyances were, .executed by the master, according: to the. •direcitions ■ "of '-the-"statute,, which expressly declares, -that, such deeds shall be as' valid as if the sa-me had beep' executed" by, the mortgagor and mortgagee, - TMé íhigMsh rule, requiring-a-p.onfirma-tion'.Qf-.the masteris report,, is. not applicable- here.', -Iff England, proceedings- are different: the master opens a book for. biddings,, and ail remains.in an unfinished state, .and.under the perfect contralpf-the--court,, until the-report of salps is confirmed. .The master, (here, has no authority to. consummate, the sale by executing á conveyance; that is done by the parties in-interest onlyapd until a ..confirmat-ion'qf.his,pepprt,.the whole of-the--business,, in relation ;to the biddings ’transacted before, him,' continues open for the exercise, of the discretion* of the ; court. . Here, the ' confirmation of the .master’s report, before the deeds are. executed,, is'not essential-; it has been rendered unnecessary by. the statute., ip . giving the piaster authority'to convey to t-he:purchasers.' The„subs'équén;t confirmation bf the. report of-sales thus consummated,. i£,th-e, whole 'has been Porrect-]y.’and fairly’conducted, follows "of course. !• "

It, is 'objected,, that the master’s report, of the 6th':of JlprM, Stating, .the,.sum .df.,3,91;.l dollars- and 46 cents-tó be due-'to', the respondent on the mortgage, has never been confirmed,, and, Therefore* :f‘he sales ought to be get psicle for.'.irregularity„, .- .’Suclt an objection cannot, at all events, - avail the appellant in this case» His alleged payment, in extinguishment of the same mortgage, is a sufficient confirmation of this report, to prevent an advantage to him by this omission. ..

The master had no authority to arrest or postpone the sale, without due notice of the "order of the 24th of June; and the circumstances urged, do not warrant the inference that he had such notice. . They aré too slight to implicate an officer, in whom it would have been criminal to have disregarded- the order, by proceeding in the sale, notwithstanding his knowledge that it had been made. His proceedings appear to have been'fairly and correctly conducted; and the sale thus made, by virtue of the decree, by consent, ought not" to be vacated or set aside» My opinion accordingly is, that the order of the equrt of chancery, of the 10th of September, 1813, confirming the sales, and directing the master to execute deeds, is affirmed,

Thompson, Ch. J.

It will be necessary to a right understanding of this case, and to .arrive at a correct conclusion as to the rights of the parties, briefly to state the leading facts in the cause, and to keep in view dates, ánd the course and order of the proceedings. The respondent, William Lawrence, having a mortgage .against William W. Sacked f and the defendant, Monell, having two judgments against Sacked';'and the defendant, Wood, having a deed of the mortgaged premises, from Sacked, in trust for all his creditors, the respondent filed his bill to foreclose the mortgage ; upon which, the parties, by their respective solicitors, on the 6th of March, 1813, entered into an agreement, that the mortgaged premises-should be sold under the direction of a master in chancery, on, or after, the 15th of May, then next, and the proceeds paid into the court of chancery 3 out of which Lawrence was to .be paid the sum due him 3 and the rights of Monell, Woods, and Sacked, to the surplus of such-proceeds, to be preserved to them, respectively. A decree was thereupon entered, pursuant to this agreement, and a reference- made to a master to ascertain the sum due on the mortgage, and to proceed to a sale of the mortgaged premises. Ac-, cording to the agreement, the master advertised the sale for' the 19th of May. After entering the decree, and before the day of sale, Sacketds interest in the mortgaged premises was sold under an elocution, issued upon á judgment in favour pf Edmund Gris-wold, for about 90 dollars ; and of which judgment, Monell had become the proprietor; and upon this sale,-'Monell becomes the purchaser. His object will be seen by noticing the dates of the several encumbrances. The mortgage.is dated, the 1st of August,, 1810. Monell had two judgments, in his qwn naitie, against Sackett. The one, of October term,. 1811, for 1,114 dollars'; .and the other, of October term; 1812, for 375 dollars. Griswold?* judgment, under which the sheriff sold, was obtained in June, 1812; and on the 30th of July, 1812, Sackett conveyed to John Woods, the mortgaged" premises and ofher lánds, in trust for all the creditors of Sackett. This deed being prior in date to MonelPs las t judgment, his object probably was to secure hiinself,, arid overreach this; deed, by availing himself 'of Gm* wold's judgment, which was one month older .than the deed. This might have been an honest struggle to secure his own debt; and if his proceedings and conduct, in relation to that sale by the sheriff, were fair, his object'may.be. attained, if he can set aside the sale made by the master, under the, agreement, and the decree tif the court of chancery^

The. regularity or fairness of the proceedings, under the sheriff’s sale, are not how before us ; the appellant, for spine reason or other, appears to have been extremely solicitous to .become the purchaser of the mortgage, and to have the same.assigned to him. Lawrence was willing to receive the money due him, and cancel the mortgage, This, it seems, would not .answer Monell's purpose, and he insisted upon having the mortgage assigned to him. The objection, on. the part of Lawrence, against assigning the mortgage was, that it might be used to defeat the trust created .by the deed to Woods, for the general benefit of Sackett'e creditors. The mortgage money was, in point of fact, paid to Lawrence ; the mortgage., however, neither cancelled nor assigned to Monell. And the first, .and one of. the principal questions in the cause is, whether this payment was made, and accepted, in .satisfaction and discharge of (lie mortgage, or only as u deposite, and s’o as not to affect the sale by the master ? I am fully satisfied that it must be. viewed in the latter sense; ■ and without prejudice to those proceedings, It is unnecessary rto scrutinize minutely, what actually passed between Lawrence and Monell, on the 7th of May, when there was some pretence of a tender of the money due on the mortgage. The .parties, ac? • cording t<s their affidavits, appear to . have understood very dif» ierently What passed on that occasion ; ánd were it necessary to decide between them, we should be bound, according to the rules of evidence, to give credit to the statement of Lawrence, as he is supported, in many particulars, by the testimony of Lynch. But this must be put entirely out of view; for the subsequent arrangement made with Mr. Jay, in relation to the money, was a waiver of any thing that might have had the appearance of a tender. It was the next day that the money was paid to Mr. Jay ; upon which, after stating the title of the cause, he gave a receipt as follows: u Received, May 8th, 1813, from Mr. Geotge M(mellf one of the defendants in this cause, 3,932 dollars and 90 cents.” Nothing is to be collected from the receipt itself, as to the terms and conditions upon which the money was received. It was a mere naked deposite, and is open to explanation from other testimony, to show the understanding of the parties. It has been repeatedly ruled in the supreme court, that receipts may be* explained, and even contradicted, by paroi evidence. The' grossest abuses and frauds might be practised if bare receipts were to be deemed conclusive, and not open to examination# (1 Johns. Cas. 145. 2 Johns. Rep. 378. 5 Johns. Rep. 72.) And the same principle has been fully recognised by other courts. (2 Term Rep. 866. 5 Ves. 87. 1 Peters’ Adm. Rep. 179, 180.) The paroi evidence in this case, on the part of the respondent, does not contradict, the face of the receipt, but is in perfect harmony with itand we must have recourse to this evidence to explain its meaning, and ascertain the intent and object which the parties- had in view. ■ Mr. Moneli certainly stahds contradicted by Mr; Jay and Mr. Lynch,, in many important particulars; he says he paid Mr. Jay the full sum due oil the mortgage ; (though he does nofsay it was so paid or received-in satisfaction of the mortgage;) that he offered to pay the costs, but they were not made out; that he left money with bis counsel, to pay the costs, and thereupon left the city, (Kew-York,) believing the cause was at an -end, and not having the slightest-suspicion that any further proceedings would be attempted therein. Mr; Jay, after stating the ineffectual attempts of Mr. Moneli to procure an assignment of the mortgage, says> Moneli informed him that he should deposite in one of the banks, the sum,due upon the mortgage, and cause an application to be made to the chancellor On the subject. - That he, (Jay,) partly to oblige Mondl, and, partly, sooner to obtain the money due his client; told, him he would beehive, if,, and when aX salé to°k place, he (Monell) should be repaid out of the proceeds • thereof; With interestXto the time of the sale. And thereupon, M'q? nbll paid' him the money, stating that he - did it to avoid .losing. the interest on the sanie. And that Mónell.then requested him to postpone the sale until the- 3d day of June, to which he con- - sented. That the sale was afterwards twice postponed, at the solicitation of Mr. Burr, ,but whether by the desire of ■Monell, does not appear. Mr< Jay further says, that when-he received the money, he did-not consider Monell as haying re.deemed the; premises, but as making a deposite in hih hands,-, tq .be returned with interest, out of .the proceeds of the sale, if a ' sale should take place, or to bé retained "by Lawrence,^if; the Court should direct an assignment.-of the mortgage, .of'tihe. sale should be prohibited. Mr. Lynch says, he was-present when the money was paid, and that-Monell requested Jay to receive- ' it, Xmerely to save "interest; and that it was,understood,, that it was 'to be repaid"with' 'interest; 'after the sale.; and that Monell' requested the sale to be postponed until some time in June* It. is entirely .impossible to reconcile the affidavit of Monell with those,of Jay, and Lynch; .for if; as .the former' states, he paid, the money,, and went home, believing the .cause at an end, and having no suspicion that any further proceedings would be attempted, why, as the latter states, did'he solicit, and actually obtain a postponement of the Sale f or.why make any agreement for'the-, repayment of his money, with the’ interest, out of‘the proceeds of the sale. There is not only two disinterested wit-' .nesses opposed 'to the affidavit of the party himself, but 'the "whole course of the transaction furnishes a very strong presumption, that Mr. Monell must be labouring under some mistake,. ' with ■ respect' to the terms upon, .which the money was left With Mr. Jay'-, His great and leading object was to obtain ion assignment* of the mortgage.- - This being utterly refused, he contemplated, according " to his o wn declarations, an application to the chancellor on the -subject ;> and it Was .probably' to give him' ’ time to'm'ake such-application that he. wanted the sá.lé postponed. This appears to me to be a -fair and reasonable interpretation of.his conduct. ■ There is nothing; contained in Mr. Jay's letter to Mr. Burr, inconsistent with the statement in his affidavit, ■But admitting' that there is,, it- Would ñót affect the prese iR; ■question, for fifese-letters "were written before the final': arfrángelatent between Mr. Jay and Mr. Moneli, which might have been varied; and we may reasonably conclude it was varied; for Moneli thereby was to receive a substantial benefit, not in-eluded in the proposition to Mr. Burr, viz. the interest of his money, deposited with Mr. Jay. It is to the consummation of a contract that we are to look for its terms, and all previous negotiations are swallowed úp and lost in the final arrangement. From this view of this branch of the case, we are bound, I think, to conclude that the payment made by Moneli, was no redemption, or extinguishment of the mortgage, but a mere deposite of money, to await further proceedings in chancery,, and to be disposed of as agreed between the parties, on the result of such proceedings being known. This payment, or deposite, therefore, could not affect the proceedings of the master, or operate as a stay of the sale and there was no special agreement that could have such effect; and, indeed, directly the contrary is to be inferred, for Moneli was to receive back his money, with, interest, after the sale; which shows, conclusively, that the salé .was to take place, unless stayed by order of the court. And the next inquiry is, whether any proceedings have taken place in the court of chancery, which would affect the sale made by the master. Mr. Jay having from time to time consented to the postponement of the sale, until the 1st of July, application, On the part of Moneli, vj as made to the chancellor, on the 7 th of June, to dismiss the bill; this was, however, dénied : and on the 22d of the same month, another notice was given of a motion to stay the sale. On the'29th of the same month, an order was, entered, ■ which, among other things, directed the sale of the mortgaged premises to be stayed; but this order was not served, or any notice thereof received, either by the master, or the solicitor of the respondent, until after the sale had abtually taken place. The chancellor, afterwards, ordered the master to abstain from giving any deeds for the mortgaged premises, until the further order of the court, and that the'respondent should show cause, at the August term, why the sales should not be vacated. But on cause being shown, the sales were confirmed,' and dee da ordered to be executed by the master, and the . proceeds of .the sales to be applied conformably to the decree, by consent, in March, last.

It has been contended, on the part of the appellant, that the Order of the 29th of June, to stay the sále, suspended the au? thority of the master,- and that all proceedings by him, after- > wards, w.ere void, although, no notice of the order was given» This position is,, in my opinion, untenable» Had "this been a final decree, which went to the-merits of the responderías claim, there might have been ’ some foundation for the argument; for all persons may be bound to take notice of decrees "in- chancery,; as well as of judgments at-lavv; (2 P. Wms. 483. 1 Vern. 286.;)-but they cannot be bound to notice all interlocutory orders, .It is, true that á court, of chancery looks , with a jealous :éye M the, purchase of a right under, litigation,, and "this for' the purpose df preventing a fraudulent eyssion of its decrees, by the parties* But where the sale is by an officer "of tlie court, to whom-no such fraudulent motive . could be . imputed, the rights of third" "persons,, who ‘ are innocent, horia fide purchasers, under '"such sale, ought to be protected.. If a party is present in court, and has -knowledge of any order or proceeding, and. doés any. act contrary thereto,- he -is guilty of and punishable1’for, a contempt; but-it by "no means follows that such proceedings are to -affect, -the rights, of third persons, who were ignorant thereof. "Suppose a judgment at law. was obtained against á-person, - and an execution in the hands .of a sheriff in- a remote county, upder which he had duly- advertised ' for ■sale, but-before the''day of sale an order to stay proceedings was -obtained, but-notice thereof nof given.-to the. sheriff, or the, plaintiff, -or bis, attorney, and the. sheriff should proceed and sell, could there be a doubt but that the' purchaser would acquire a valid title ; And should not’g court pf equity, equally with;a court-of law, protect in-. hocérit, bona fide purchasers ? It Would, certainly , be -unprecedented* to, set aside the sale, without the purchasers’ being1brought into court,-in some way,- and an "opportunity afforded them of defending their rights, their titles having been consummated ; and without their having received dby notice of the" order1 staying the-sale,, or of the present appeal, and there- being no complaint of inadequacy in" the price paid by them, or of any unfair practice in the .sale, ■ There i-s¡ also, another objection to the, (node adopted by the appellant to obtain relief in the courtbelow, even if an application for relief could in any. way be sustained ; -it is an attempt'to set aside, -upon motion, a decree entered by" consent of parties. This is ■ against the established mode of proceedings in chancery. .The,case oí Harrison v. Rumsey, (2 Ves. 488.,) came before the court upon- petition '; and'Lord Hardwicke said he would by no means set aside a decree ob-tamed by consent of counsel on both sides, for it would be most dangerous, and it was ail established rule not to do it, nor would he make the precedent. There was, he said, a good while ago, an appeal of that kind, in the house of lords, who desired the party to bring an action against the counsel: if they could prove collusion on the counsel, it would be a different thing; and, in the case of Bradish v. Gee, (Ambler, 229.,) the same lord chancellor said, where a decree is made by consent of counsel, there lies not an appeal or rehearing, though the party did not really consent'; but his remedy is against his counsel. But if such decree was by fraud and covin, the party ma'y be relieved against it,' not by rehearing, or appeal, but by original bilL Independent of these difficulties, which ¡.consider insurmountable, the general equity of the case appears to me to be against the appellant. There has been no sug^estiop that the decree by consent was obtained by fraud or imposition, or that the .mortgaged premises were not sold for their full value ; and he is now seeking to set aside this sale, made pursuant to his own agreement, for the purpose of vesting in himself, solely, the title, and to prevent the equitable distribution of the surplus among the creditors of Sackett. in whatever light, therefore, the case is considered, T am of opinion that the order of the chancellor, confirming the sales by the master, ought to be affirmed. '

This being the opinion of a majority of the court,^(a) it was, thereupon, ordered, adjudged, and decreed, that the appeal be dismissed, and that the order of the court of chancery be affirmed ; and that the appellant pay to the respondents their costs in defending the appeal, to be taxed; and that the record be remitted, &c.

Judgment of affirmance.

(a) For affirming, 12. Mr. Justice Sfmm, and ten of the senators, were for reversing^